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OMV Petrom: Emergency Ordinance 114/2018 to impact profitability by some 50mln euros

business-review.eu
OMV Petrom

Emergency Ordinance 114/2018 will have an impact of about 50 million euros on the profitability of OMV Petrom, these being only preliminary calculations, Stefan Waldner, the company's Chief Financial Officer told a Wednesday's press conference.

"We cannot know what the exact impact is until we see the secondary legislation. We did preliminary calculations, which show a two-digit impact on our profitability, but I would like to point out that this is a preliminary estimate," said Waldner.

OMV Petrom announced that it will lower investment by 17% this year, up to 3.7 billion lei, from 4.3 billion lei in 2018, due to the legislative instability.

"A strong year for OMV Petrom is a strong year for Romania, but because of legislative volatility we have to reduce the investment engine. We are committed to continuing our operations here, we hope to have a free dialogue with the authorities so that our contribution to the economy Romania will grow," Christina Verchere, CEO of OMV Petrom, said at the same press conference.

Last year, the company had investments of 4.3 billion lei, up 44% from 2017.

"Recent regulatory instability has prompted us to review our investment growth plans while we are looking for clarity about the investment climate in Romania. We plan investments of about 3.7 billion lei for 2019, mainly in Upstream [exploration and production]. Our priority remains to maximize the value of Upstream's current portfolio and we estimate that we will limit the decline in average daily production to about 5% over 2018, excluding portfolio optimization," the company's representatives said in the report on last year's financial results.

In December 2018, the Government issued Emergency Ordinance 114/2018, which caps to 68 lei per MWh the domestic gas sales price and provides for a return to the regulated electricity market. At the same time, the energy companies will pay to ANRE a contribution of 2% of the turnover related to the licensed activity.

The OMV Petrom Group posted a net profit of 4.08 billion lei in 2018, up 64% from 2017, when it was 2.49 billion lei.

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